Two of India’s biggest used car entities from the organised sector – Maruti True Value and Mahindra First Choice – have reported a spike in demand over the past few weeks.
More people are expected to give up public transport and switch to private mobility as a phase-wise easing of the national lockdown takes shape. This is pushing demand for pre-owned cars higher than ever.
Enquiries for used cars have doubled during the lockdown period compared to pre-lockdown period, a consumer survey involving more than 1,000 customers and more than 100 dealers has shown.
Two of India’s biggest used car entities from the organised sector – Maruti True Value and Mahindra First Choice – have reported a spike in demand over the past few weeks.
Shashank Srivastava, executive director (sales and marketing) Maruti Suzuki said, “Reduced income levels, higher anxiety levels among buyers and tendency to have a second car will push demand for vehicles having smaller ticket size. There has been an increase in level of enquiries for used cars.”
Enquiries for used cars have doubled during lockdown. From 19 percent during pre-lockdown enquiries have grown by 37 percent during the lockdown period for a particular vehicle. During the same period enquiries for a new vehicle dropped from 81 percent to 63 percent, according to a survey done by Mahindra First Choice Wheels-owned CarandBike, an online auto portal.
Another survey done by used car trader Cars24 states, “50 percent of the respondents said that they will be purchasing pre-owned cars once the lockdown is over. In another interesting finding, 22.5 percent of the consumers who were planning to buy a new car last year would now prefer to buy pre-owned car because of their limited budgets.”
India’s used car market is estimated to have clocked 4.4 million unit sales in 2019-20. The new car market during the same year closed at 2.78 million units. The new car market will likely be hit by a phenomenon called downtrading wherein buyers switch to a lower-priced car than previously decided due to multiple personal reasons.
The CarandBike survey further points out that though there is preference for a private vehicle ownership there has been a significant drop in enquiries for cars priced above Rs 7 lakh while demand for cars priced under Rs 3 lakh has picked up significantly. No new car sold in India can be bought for under Rs 3 lakh. The average price of a used car in India is around Rs 3.1 lakh.
“There is this phenomena called transfer of demand downwards which means people in the upper segment will buy the middle segment and middle segment will buy the lower segment and the lower segment buyer will buy a used car. All data points, for instance from China, suggest that people are preferring private transport instead of public transport. Till last year the average ticket size of a used car was on the increase. For us the average price was Rs 3,20,000 last year as against Rs 3,00,000 in FY19”, added Srivastava.
